One Size Fits All

I logged into to my credit card account today and noticed three "interest rate adjustment" debits to my account totalling: $45.69. The transaction dates were from August, September and October of 2007. I was curious so I investigated what these payments were for, and discovered that they were the last three finance charges I had paid in August, September and October. This was also a very stressful period in my life so I apparently was not my finances as I normally would. I could not figure out why these amounts were being debited now so I downloaded an old statement and found that I had a grace period interest rate of 0% ending in July, 2008.

I had originally opened up a card with HSBC because I was interested in the 1% cash back rewards on all purchases. Unlike some credit card companies, the 1% cash back reward has so far been given without any question. I also opened the card because I was ticked off by the customer service from MBNA. I had paid a finance charge of $12.63 to transfer my balance from MBNA to HSBC which to date is the only fee I’ve paid to the company (at the time I didn’t know that there were fees to transfer balances. My reading of the contract said there was no balance transfer fee…but I was wrong). However since I began using the HSBC card, I’ve received a total of $150 in cash back rewards in one year. However, HSBC also has this bad habit of mailing me all sorts of random crap such as privacy changes, checks to use that wind up in the firepit and whatnot. This costs money. So who is paying for it? I’m guessing the people who don’t manage their credit card habits well. As well as advertizers who make their membership agreement look like they are checks that can be cashed in exchange for a membership.

For the last couple of months, I’ve been thinking of cutting all credit card usage from my life (husband never uses a credit card as its just too complicated). I don’t have a problem with managing my finances (paying in full, for example). But I do have a problem with all this waste created by me using a credit card. Its quite wasteful and since the main reason I really use the card is so that I can get 1% off of every purchase, it seems like a tremendous waste of resources: get 1% cash back + 1 ton of paper waste. I am not sure I want to live with consciously generating that amount of waste, especially now that I’m aware of it.  I think I will eventually close all my cards down after our move. Since I have good credit should I need to open another card (and really I don’t as I have a line of credit open), I could. But I won’t.

We bought our bikes (Surly LHT) over the weekend. So I guess there is no turning back now.I also have sold our chest of drawers our futon (which was our bed) and other miscellaneous items. For now we’re sleeping on a foam pad until I buy us sleeping bags.

I also signed up for a 0% interest credit card. The introductory interest rate expires in August 2009 so I can rely on it if I really need to. The card has a picture of the U.S. flag to show my patriotism. The catch to the 0% interest rate is that the billing cycle is 25 days and when I made the call to activate the card I got connected to a live, loud, human being from Utah who was very determined to sell me my own peace of mind that cost only this or only that. He detailed a long list of horrible events that could go wrong: death, dismemberment, accident of other types, and so on. And he went on to say how sad it would be if my loved ones were relying on me for their livelihood. Yes it would be sad, that is why I expect my husband to fend for himself and I don’t have anyone else dependent on me.

I was in a good mood so I let him go on and on about how some customer thanked him because he broke his hip falling down the stairs and thanks to this program that cost so little he now is happy (with broken hip) and less stressed.

O well. I’m still a bit stressed about the trip mainly on how much we have to get done before we go.

Thanks everyone for your kinds thoughts and sending good vibes. I was finally able to get some sleep instead of tossing and turning from the pain. Who knew nerves could hurt so much?

Anyway…the month is finally drawing to a close and since I got to eat home cooked meals for every single meal today, I’ll take it as a sign that the black clouds of doom have drifted off to some other place.

The main point of this post is to mention that I made a major purchase this month: a laptop computer. I bought a Thinkpad from Lenovo (IBM still holds a 6% stake in the company). From what I can tell with the UPS tracking number, the laptop got shipped from Hong Kong but I don’t think the machine was put together in Hong Kong. It was probably made in the Pearl River Delta of Guangdong province which is north of Hong Kong (via). It then wound up in Alaska and then got transported to Louisiana and finally made its way over to me.

A few months back when I decided to get a laptop I searched around to see if any laptops were manufactured in the U.S. I was hoping that in buying something that was made here I could pretend that the workers were paid something decent and worked in somewhat acceptable working conditions. I found that no laptops were manufactured in the U.S. The Panasonic Toughbook was the last laptop that had its manufacturing process shipped overseas and I couldn’t get a clear answer on where that was…China? Japan? Korea?

Then of course there is the issue of cost. Most of our computers over the years have  been put together from spare parts found either by picking through university students’ trash or buying it second hand. So I was a bit nervous of plunking down all this money for a laptop. The one I got was about $500 which is still alot of money for me.

The main reason to buy a laptop in addition to the low electric usage and limited space that a laptop takes was because my old desktop computer was dying. The motherboard finally died after moving all my data to my laptop earlier this month. As did my memory sticks, the hard drive…everything really. So its pretty good timing on my part considering when I bought the laptop.

In addition to the basic laptop I did buy one thing extra, a recycling service. For about $30 I can send my old computer (keyboard, mouse, monitor, chassis with stuff weighing no more than 69 lbs) to a place in New York State. From the agreement’s FAQ:

What happens to my equipment after I send it in?

Your equipment will be evaluated with respect to its age and technology and either recycled or disposed in an environmentally sound manner. Lenovo does not make any representations with respect to the recyclable content of your equipment

So that’s that. How will they "dispose" it? Will they melt the metal down? Will they melt the plastic down for reuse? The case I have is very beautiful and very roomy but my husband thinks its cursed so he is not going to use it…so I know that is one item that will have use for someone else. But what about the other components?

—

On another (geeky) note, the laptop came with Windows Vista. Buying the laptop with XP would have cost more so I got Vista. I look at Vista for a few minutes and noticed that the big change is that everything got moved around so now all those XP certificate holders would have to get a new certificate so they know the exact placement of menu options and how it differs from XP. Its a nice little racket. I then downloaded a debian windows installer and installed debian. Found that the kernel didn’t have support for my wireless card and couldn’t install new kernel because boot was too small then couldn’t expand boot because I kept getting a kernal panic even though everything was fine and finally gave up and got me some eye candy in the form of Linux Mint. I love Linux Mint. Its debian based so I am still in familiar territory but its perty!  The default install is beautiful and everything is detected and I have a nice bootsplash screen. What more could I ask for?

From husband’s email:

Under Tiberius, the Roman Emperor, there was a financial panic.

This was caused first by Tiberius seizing property for "crimes against the state". Then he took the money from the treasury and used it on orgies.

Taxes were high. He spent little money on public works.

Interest rates on loans were limited to 1.5%. People ignored the rule. Tiberius ruled that they were to uphold the law and he gave people 1.5 years to get their books in order. The result? People called in their loans. Why loan out money for so low interest. Since all loans were called in at once, there was a panic. There were limited coins.

Land prices went almost to nothing.

Tiberius had to rescue the bank by loaning it 1 million coins at 0% interest to pay out to borrowers to exchange securities for land.

 
Edit: Here is some more info from what looks like an excerpt in The Influence of Wealth in Imperial Rome by William Stearns Davis.

I opened an interest bearing checking account with ING. One of the main reasons was because of Regulation D.

Now that I have shifted all my checking account transactions to ING let me explain why I moved from my credit union. A few months back I received a letter from my credit union telling me that I had violated Regulation D by having more than a certain number of transfers from my savings account. These transfers were actual transfers, from saving to checking, from my saving to husband’s saving, saving to another saving, etc. I nickle and dime my way into savings thus I always had a zero balance in my checking account. I moved money when needed from my savings account.The transfers were always done to pay bills. The interest rate at the my credit union for savings accounts is pitiful. I got maybe a dollar every month. But it didn’t bother me, because the bulk of my savings was earning high interest at a high yielding savings account.  Now I was being told that after a certain number of transfers, my savings account would be locked untill the end of the month. But I could still access the money by making withdrawals from the bank teller if I showed up in person. This is very annoying, because I do all my banking online, and getting to my credit union is a pain in the neck since I live far away from their branches. Plus I had a grudge against the credit union for fining me last year because I didn’t give them my new address in good time when I moved. Since banks don’t like to forward bank statements I got hit with a $30 fine (they wouldn’t budge on removing it). And to add salt to the wound, one month after my move they decided to stop mailing out bank statements and instead have them available online.

Anyway…so back to this Regulation D business.  Here is a good article about it. The article does not make me understand  why I should be punished for my miniscule transfers. 

Below is what the letter from my credit union said to notify me of a Regulation D violation:

Federal regulation requires financial institutions to limit withdrawal transactions on certain accounts. Please be advised that during the month of October you made more than six preauthorized or automatic withdrawals or telephone transfers to another account from your Savings accounts. Your savings accounts include your Regular Savings account, Club accounts, Higher Yield Savings account and your Money Market account.
Effective 2/1/2008, PF Credit Union, in accordance with Regulation D, will no longer permit more than six transactions from your Savings accounts as described above. Once the monthly limit is reached, an automatic monitor will prohibit additional transfers and withdrawals.

The following combinations qualify as Regulation D transactions, and therefore, are limited to six per month. For Money Markets, up to three of these six transactions may be made by check:
Online Banking
Automated Clearing House
Phone requests using audio response system or speaking by telephone with a PFCU Member Service Representative
Fax or email requests
Automatic Transfers

Withdrawals and transfers from your PFCU Savings and Money Market accounts are unlimited when made under the following circumstances:
In person
ATM
by mail
By Teller Phone, Teller Net or fax when requesting a PFCU official check made payable to you and mailed to your address of record with PFCU.
Transfer to a PFCU loan in your name.

Now that I’ve been reading the Secrets of the Temple, I wonder why Regulation D exists at all. The federal reserve which basically controls all money has what’s called a discount window. From what I understand, this is where banks can borrow money to offset any deficits they may encounter on a temporary basis. The primary purpose is to prevent an old run on the bank scenario. Banks and apparently credit unions can also access the discount window. Credit unions are now set to be combined with banks under the same charter soon. Financial institutions are required to maintain a certain amount of money available at all times. The specific amount is based on a ratio set by the agency/governing body that they are controlled by. So my question is: if there is a shortfall and banks can borrow, but the shortfall caused by me moving $5 - $200 dollars between acounts causes a violation of Reg D…isn’t this a bigger problem? I mean its not like I’m moving $10M around every 20 minutes.

So maybe there is some sort of penalty for borrowing from the discount window. Then why is my account locked after 6 transfers? Why isn’t there a fee or some sort? And why is all this invalid once I show up in person to move money around?

ING also has this limitation on how much transfers can be done…but its limited to their online savings account - not their checking account. At the credit union, I was moving money from savings to checking or checking to saving. As far as I can tell…this is just a bookkeeping issue. Debit here, credit there. Also…to use an accounting term, my transactions were immaterial. And my money was not in a money market account where I could be penalized for touching it. But why is there a problem with transferring from savings? Isn’t a savings account a termporary holding account anyway? Are banks promising to sign off on loans based on the numbers currently sitting in savings accounts? I don’t get what Reg D is supposed to do.

So…do you know what the purpose of Reg D is? Have you violated Reg D and received a scary little letter? Please share.

Another excerpt from Secrets of the Temple:

New money was created not only by the Federal Reserve but also by private commercial banks. They did it by new lending, by expanding the outstanding loans on their books. Routinely, a bank borrowed money from one group, the depositors, and lent it to someone else, the borrowers, a straightforward function as intermediary. But, if that was all that occurred, then credit would be frozen in size, unable to expand with new economic growth. On the margins, therefore, bankers expanded their lending on their own and the overall pool of credit grew - and the bank credit turned into money.

A bank officer authorizes a $100,000 loan to a small-business man - a judgment that the businessman’s future earnings will be sufficient to repay the loan, that his enterprise would create real value in the future, which would justify the risk and the creation of the additional money. Ordinarily the banker would not hand over $100,000 in dollar bills. He would simply write a check or, more likely, enter a credit in the businesman’s bank account for $100,000. Either way, money has been created by the simple entry in a ledger. Implausible as that might seem, it was a reality that everyone would accept, even if they were unaware of its audacity. The businessman would go out and spend the money, writing checks on his new account, and everyone would honor their value. The creation of new money, thus, was really based on bank-created debt. This concept is what baffled and outraged so many critics of the money system. Money ought to be "real," they insisted. It should be based on something tangible from the past, accumulated wealth like gold, not on a bankers hunch about the future.

We got $1,200 per the economic stimulus package along with two mailed notices. One stated that we were going to receive $1,200 and one stated that we should have received $1,200.

We donated some of the money to charity, paid a little bit to husband’s student loan and saved the rest by splitting into our emergency fund and our L.A. moving fund.

In general I just don’t like spending money and thankfully, I married someone who is just like me in that regard. Usually, we spend money without guilt on food - especially raw materials. Perhaps its because of my general fear of financial uncertainty or maybe its other reasons that a psych major would have a field day analyzing…whatever it is, I cannot spend money for non-neccesities without a lot of mental anguish. I mean…I last purchased Oyin’s deodorant paste which is made from baking soda/kaolin clay/essential oils and categorized the purchase as one that was fun and frivolous. I guess I am living the stereotype that beancounters are not fun.  

Perhaps its because of sfordinary’s experience on her volunteer vacation or a confluence of other factors…but I’ve decided to relax a little bit and spend some money instead of obsessively saving every penny. This means I’ve started frequenting coffee-shops again. And this is an indulgence that I never get tired of.

I love coffee shops, especially ones where I can stay for hours reading or knitting or people watching or day dreaming. Coffee shops are the one public space I can visit by myself and stay in my little bubble without being hassled. The libraries here tend to attract patrons of the sleazy variety so I don’t spend too much time in libraries besides checking out books or returning them.

I love the smell of coffee and the general din that comes with a coffee shop atmosphere. I get exposed to new music in coffee shops. And for the most part I can stay very focused on a task (including day dreaming) in a coffee shop. I also get my creative juices flowing when I’m in a coffee shop. 

Really the only point of this post is to note down that I’ve quit being so stingy about money (for now) incase my future self wanted to look back to figure out when I began to change my views about money. 

Back when I didn’t know anything about money (10 years ago) I regularly paid overdraft charges. It was completely idiotic on my part and I’ve reformed my ways.

However when reading other personal finance blogs I noticed that many bloggers regularly face these overdraft fees at their bank due to various reasons (automatic payments when there wasn’t enough money or just poor money management skills).

One way I avoid overdraft charges is by opening up a line of credit (LOC) and linking it to my checking account. I have two checking accounts that I use, one with a local credit union and an online checking account (ING). I am keeping my credit union account open because sometimes I need to hand over voided checks for a variety of reasons and my online checking account doesn’t deal with paper checkbooks. I have LOCs linked up with both my checking accounts.

In the event that I do overdraw my account, the difference comes from my LOC automatically and if its a small amount, it will be less than the fees the bank might charge for overdrawing the account.

I often transfer money back and forth. For example sometimes I get paper checks and instead of spending the postage to mail the check to ING’s office in god-knows-where, I deposit it with my credit union and then transfer the money to ING online.

The LOC also can serve as an emergency fund. Some people think that the interest rates nowadays are pitiful and they’d rather put their money in a place that could do more than make a small bit of interest at the local bank. The added benefit of using an LOC as an emergency fund is that one is more likely to use it in the event of a real emergency since tapping it will result in interest being charged on the sum borrowed.

I wonder if I should submit this post to a financial carnival…

I am really tired and sleepy and at work. Apologies for spelling mistakes, more than usual grammatical errors, etc.

A few weeks back when Crunchy Chicken introduced the challenge for May, I readily signed up. I was especially excited about turning off our ancient fridge and going without electricity. I thought: well my husband is unemployed so he can cook my food daily.

I was not expecting him to actually get a job, especially since his job applications were going into a big black hole.

Well he got a job and now he is working both the part time one and the full time (its via a temp agency) one for at least the next 2 months until we move. We decided to toss all his earnings at his student loan and continue to live on my income.

So we’ll be using the fridge since we cook our weekly meals once a week and store it in the fridge.

SF: I haven’t forgotten about the vegan meal ideas. Its in draft and very incoherent right now.

The other part that will be challenging will be no plastic. I still wind up getting plastic packaged stuff once in a while. This weekend I will be in NYC so I should remember to carry all my snacks and drinks with me so I don’t buy something packaged in plastic or styrofoam. I’m also going to try to check out restaurants focused on local foods.

I will also be taking a class later this month that runs for a few weeks so I should remember to be adequately prepared with the proper foods, drinks, chocolate, etc. 

Gee…this is long. Brevity is not the word of the day. 

My new raise kicked in this month. I immediately increased my savings (from 5%) and my contribution to my defined contribution (401(k)) plan from 5% to 10% reducing my federal income tax by a few bucks every paycheck. I get 100% matching for the first 5%. Retirement also includes my IRA. Currently we’re not paying anything toward husband’s retirement (if I die and husband decided not to kill himself from grief, he’ll get life insurance proceeds). If I get my expected raise a year from now, I will start contributing toward his retirement account and possibly pay toward his student loan as well, since we’ll be flush with cash. This is the benefit of being extremely frugal. Any extra cash feels like we’ve won the lottery. This is how my income breaks out (numbers based on gross income)

Savings includes my health savings account. I am supporting myself and husband on this salary. Husband’s PT job wages goes toward his student loan payments which is not included in here. If you’re wondering what my salary is: its $39,086 gross.

I notice many people find my blog searching for information on living a tightwad lifestyle. I suppose I better dole out some advice.  So…listen up.

Neither of us feel deprived with our lifestyle or my income. There are days when I feel positively wealthy. Once in a while I feel a bit mopey over my small savings account and the fact that I spent a fortune eating crappy food for so many years…but I guess I had to go through that to arrive where I am today. 

We follow all the usual personal finance advice: brown bagging lunches every day, making from scratch, turning down heat, etc, etc. Basically all the boring stuff that a magazine like Kiplingers comes up with every few months. And I am a nickle and dime type of person, so I strongly believe that all the small actions contribute toward substantial savings in the long run. But at the same time, I will spend alot of money on a product if I believe its worth it…such as a Wüsthof Chef’s knife or a good quality cast iron pan.

So what are the unusual things we do to save money or live a thrifty life?

1. We are childfree. While I made up my mind only very recently over this issue, I think the fact that I used birth control and had an abortion fund for years has been a very significant source of saving money and being aware of the cost of being a parent.

2. We are pet free. This decision has often been made for us as most rental units discourage pet owners from renting in a variety of ways. And my husband and I are just plain lazy. Having to feed another being would take away time from us lounging around being lazy. I don’t think this is going to be a lifelong decision however. I have realized that there are some very practical reasons where I would need the following: dog, cat, hawk, goat, hen. So maybe when we finally get our own land, we might get some critters.

3. We are car free. This too was a decision made for me…or rather, owning a car was never a priority for me. My husband got rid of his car in the late 90s when he discovered that we was paying more in car insurance for his junker than the car was worth. And since we love living in urban environments, a car is often a nuisance. 

4. Our hobbies are free or cheap. So we don’t own a television (we watch DVDs on my computer) or play the latest computer games, anything that requires a steady payment (except for our naked dsl line). We love biking, reading, and talking. Additionally, I actively spend time limiting my exposure to advertisements whether on TV or online. I am weak in the head so I don’t see a need to expose my poor brain to wealthy marketing firms’ gimmicks.

5. We try out crazy experiments. And I use the word crazy only because other people say  its crazy. These experiements don’t save money as much as expose us to a new way of thinking. One of my first experiments was done when I was single and 18. I decided to quit watching television for a month. At the time, I thought that the single worst thing that could happen to me would be missing my favorite television show. I found that sentiment to be disturbing. Plus I was constantly arguing with my younger sibling over what to watch. I spent the entire month locked up in my room reading books and listening to music. And after that month was over, I never had the same interest in TV again.

Nowadays we try other experiments like going vegan or using grey water to flush the toilet or increasing the number of days between showering. Often the main question behind these experiments is how I would deal with my life if I had no: electricity or tomatoes or water or whatever.

But there must be a downside to living on 46.76% of my income right? Why, yes!

1. I live in a crappy neighborhood. However, when I lived in Center City paying the same amount for a small one bedroom apartment in a gorgeous neighbood I also had problems…but never heard gun shots. Although…I did have to deal with bums sleeping outside my building and annoying drunks staggering all over the sidewalk.

I originally moved to my current neighborhood because I was going to take out loans to finish up my degree and I wanted to limit my living expenses as much as possible (husband was also in school and we were working PT). However, the apartment water pipes froze in the middle of winter and our heating system broke, and I had exams and my period and I was going mad with stress. So I moved into the current place after breaking my lease because we needed a place asap. I decided to stay on for a few months past our lease this year because we’re planning a cross country move and moving to a new place would increase costs only to move again across the country. So I decided to deal with living next to abused kids, pets, annoying banshees and practicing bands.

That’s the only downside. This post will have an abrupt ending because its getting too long.

I’ve been thinking about our upcoming cross country move alot…so I’m going to blog about it so I’ll quit stressing about it so much. 

So we’ll be moving to California by the end of the summer. I prefer to move after August 31st when our lease ends (we won’t be getting a temporary lease because I just asked my landlord to extend it by a few months because I need to finish up a few things), but we might move before that if one of us gets a job between June and the end of August. Ideally we’d like to move to Los Angeles. My top pick is Santa Monica. Second pick is Pasadena next to the Dervaes family. The pessimist inside me says that we’ll probably wind up in Compton because we’re ghetto and we always live in the ghetto. I also want to work in an industry that has values I agree with. I plan on being an employee for a few more years while I’m transitioning into a self-employed person…so for now I’m making goals based on staying an employee. If we don’t get a job by August, we’re moving and going to start temping. I’ve written to a few people I "know" online and their responses on temping was very encouraging.

According to my calculations we’ll have about $11,000 saved up for our move which will be just for living expenses when we get to CA. I will also have more than $9,000 in open credit if I really need it in some sort of dire emergency. I’m saving up for the actual move plus interview flights (and thus, subsequent polar bear deaths) separately.  We’ll actually be moving without taking any of our stuff. Our furniture is either second hand, too cheap to move or picked from the trash. Our clothes fall into the same category. We don’t own anything of value that’s worth moving, so all of our stuff (composter, beer making supplies, computers) will be given away or sold come August. I’m taking Chile’s Cut the Clutter challenge to the max.

I am just really worried about getting a job (or my husband getting a job). I keep thinking back to the days when I just got my work permit and how incredibly stressful it was to look for jobs and not make any headway for months. By job I mean something stable, and full time. While I’ve been a waitress and worked at all sorts of food establishments and cleaned toilets, and babysat babies….I really don’t want to do that right now after taking this gamble and going into debt for a college degree.

True, everything turned out well, but the possible lack of cash flow makes me panic. And I’ve been chopping away at my student loans for a while now, and I don’t want to stop. But I’m willing to put it into deferral temporarily.  

Once we do get to CA, we’ll need to get a bed/futon pronto. Everything else can wait. We’ll probably need an apartment too, so if we don’t have jobs lined up, we’ll be living in the cheapest (and probably crappiest) place we can get a hold of.  At least freezing to death will not be likely.

I do want to move. I am really tired of this city and want a change from the east coast living. I would really like repeated days of glorious weather. I think it will be fun to live in a place so close to the ocean not be cold for much of the year. I’d like a new city to explore. And we’ve waited for this move long enough. Its high time we just did it. 

Well, March is over. So how did I do on the Trim the Fat challenge? Eh.

1. Spend no money unless necessary - Despite my desire to hold off buying new pants, I didn’t hold off. I purchased a pair of curdroy pants from the thrift store as well as a long flowy pretty skirt (part of a very old attempt to be more feminine). Husband purchased new black pants for PT job as thrift store didn’t have any.

An aside: Also I am admitting it here loud and proud that I love farmer style clothing. I love plaid. I love curdroy. And after a discussion from some of my female friends this weekend, I love overalls (don’t own any right now). Friends are endlessly amused at the number of plaid shirts I own, but there is no denying it. I love plaid. It covers the dredded chest headlights of which I am a constant victim to, and it covers up the size of chest acreage.

2. Leaner food consumption - This was a complete failure. We went out to eat twice (then paid for it dearly with my food poisoning episode which resulted in me going without food for over 2 days…so there was some leaness here). I also got many containers of orange juice and first set of organic oranges. I really need to figure out what we can and cannot eat based on moral, ethical and societal issues. Its all in my head and since I have a bad memory, this is not a good reliable source. And I ate almost no greens.

3. Less electronic stimulation - As I’ve mentioned on other blogs, we went back to candle light nights during the weekends after Green Bean posted about Earth Hour. This meant that I couldn’t read before bed, but I definetly was able to drift off into sleep easier. I also spent nearly every weekday not using my computer at home. I tried to have one completely free tech day at home. This is challenging because friends have learned to only communicate via email since we don’t have a landline and don’t use our cell phones too much. This is difficult in making constantly changing plans.

4. Trim my bodyfat - This turned out to be unexpectedly challenging. On one hand, I lost about 5 lbs by puking all over the bedroom (on the carpet!) and bathroom over the past few days. So I am mildly alarmed. But I did make an attempt to bike more. For one, the weather was nicer. However….this may just be me and my frustration coming from living in the same place for too long…but the drivers in this city of brotherly love are impossible!!! The blocks are so short, so why do they speed up between blocks, honk and scare us out of our skin? Why don’t drivers check their rear view mirrors or side view mirrors before opening up the door and nearly dooring me (or poor husband who did get doored). Why are tinted windows legal? Why do I have to breathe from a tail pipe? We got so frustrated that we’re taking a break from riding. 

And yes, this means I am apprehensive about living in LA. But I want to try out the city for at least a year. At least there will be a whole new set of a$$holes to deal with. So it will be exciting. I am also trying really hard to be positive and happy, but I am still a grumperella.

WARNING: This is another boring tax post. This is not advice. The writing will probably get on every English language person’s nerves.

According to the IRS, I can itemize my deductions and deduct state and local income tax or state and local sales tax. Every year I’ve filed my taxes I’ve used the standard deduction because my itemized deductions were really small. Most people that itemize their deductions tend to own property (or a business) and owning property is touted as a reason to itemize (or maybe its the other way around) and get a lower taxable income.

After yesterday’s entry I was wondering if there was a way to deduct state and local taxes…because my take home pay is a bit low and I want to have just a little less worrying about money. I assumed that the standard deduction would be $10,700 (although it could be $10,900) for 2008 so my itemized deductions have to be more than that amount.

Here is what I worked with:

The numbers are slighly off because I just took the numbers from my previous pay check and multiplied it by 26 (number of pay periods). If I add the deductions above I get a total of $11,139.46 which is more than the $10,700 so I could deduct this amount from my federal return. Will that difference of $439.46 be my refund? I don’t know. The Roth amount is from May onward, because the amounts through April will be for 2007 tax year. Additionally, the numbers will change when I and/or husband begin working in CA.

I won’t be deducting sales tax because we won’t be buying too much stuff this year that will have a sales tax. And I wonder how things are going to change with moving to a new state and city. Apparently Los Angeles has no wage tax, but CA does and it can go up to 9.3%. Hmm…I read that CA doesn’t get much Federal funding which could one reason their tax rates are so high. Or maybe its because there is a number of high income earners living in the state… I am speculating here. I did a very rough calculation and found that my take home pay in CA could be higher than my take home pay in PA by $68.54 per pay period (using the salary from Philadelphia region, not the L.A. one).

Anyway…the minimum payment for husband’s student loans is $231.06 (which will take 19+ years to pay off at that rate). If he can pay that amount every month (starting in April) this year, the interest paid will be $2,758.21. I am currently paying down my unsubsidized student loan. The subsidized student loan payments come due in June 2008, and ideally I’d like to pay off the unsubsidized portion before June. However I’m paying small amounts toward it, prioritizing saving (for move and emergency fund) for now. If we both pay into our Roth IRAs, we can get the $3,200 deduction (assuming it stays the same in 2008). So this could mean we might be able to get a higher deduction by itemize our deductions without owning any property or a business.

DISCLAIMER/PARANOID thoughts: Don’t take this advice as its not meant to be advice…its my general ramblings about my favorite topic in the world. 

I just read Publication 15 which is  the Employer’s Tax Guide. I was trying to figure how my employer determines how much tax to take out per pay check. Between the Federal Govt., the State Govt. and the City Govt., I give away $143.25 out in taxes every two weeks without fail. I used the withholding calculator last year, but I only made the adjustments to my husband’s paycheck. I increased the withholding allowances based on student loan payments and retirement contributions. The tax tables for 2008 have not been published, but according to the 2007 tables, my tax should be 4,111 at my salary of $32,605 (assuming no deductions). And this apparently puts me in a 25% tax bracket. But that would mean I am giving $158.11 per paycheck just to the federal govt. alone. So this table didn’t make any sense to me.

In Pub 15 on page 46, my tax should be $53 per pay check (as a married person with 2 withholding allowances listed on my W4). But I get $54.25 taken out of every paycheck (based on taxable income, i.e after retirement and health care deductions which are not taxed). If I have 6 withholding allowances, my tax would be $0 (my new raise goes into effect next month…so I’m still surving on my student pay. New raise is $39,086, which in L.A would translate into $40,752 as I will be on the same pay scale when I move). Should I go to payroll office and harass them? I’m sure they’re going to tell me something about how the thing is automated and that they can’t fix software bugs, etc, etc. But I want my $1.25 dammit! That is $32.5/year which would buy a nice case of beer (or new beer making ingredients) or a nice dinner for two.

I reduced my retirement contribution to 5% after husband became unemployed and I get 100% matching to my 5%. I decided to increase the percentage to 6% for the next pay, and will probably increase it again if I feel comfortable on the reduced pay. If I increase the retirement contribution to 7% my taxable income falls and my federal tax per check will be $51. Or maybe $52.25.

The other pre-tax withholding is for health “insurance”. This is a high deductible plan (HSA) I wrote about previously. The deductible is $1500 and every pay day I put in $67.72 into an account managed by aetna which I can use to pay for medical things up to the deductible (if I understand how this thing works). I don’t know if I’m comfortable with aetna managing my funds…I think I can do that myself. This $67.72 is for both me and my husband. Currently the balance is $125.20 ($0.20 was the interest I earned for the month of February) and we’re saving up for a vasectomy (I think I’ve convinced my husband to do it, but he may chicken out…). The company is also slow in posting my payments into the fund. So the balance is off. Also the company has a crappy, buggy website and is in cahoots with Chase….which to me means trouble because chase is always doing bad things to their customers.

BTW, husband recently got a PT job that is perfect for him. And I’ve been stressing him out to get another job to pay down his loans…because I am the wife who hates debt. So he is looking for another job (either PT or FT that fits in with our freakin’ ethical and moral values, because I’ve already brought down our collective karma not having the right living down pat)

Edit: PA and Philadelphia has a flat tax and no opportunity for exemptions. Tax rates are: 3.07% for state and 4.219% for city.

I just learned about the Choose to Save website. From their about page:

Financial security is one of the most important issues for most Americans. Whether it’s putting kids through college, saving for an emergency, buying a house, or saving for retirement - having enough money for life’s demands is among our biggest concerns. And yet, many Americans have not taken even the first steps toward a secure financial future.

The Emmy and Telly award-winning Choose to Save® national public education and outreach program is dedicated to raising awareness about the need to plan and save for long-term personal financial security.

As part of its mission, Choose to Save® develops user-friendly, multimedia materials to help individuals plan and save for their financial future, including:

• Public service announcements (PSAs) using humor, powerful images, and compelling information to encourage viewers (and listeners) to take charge of their financial future.


• ChoosetoSave.org- a Web site completely devoted to financial education. It includes free savings tools such as the Ballpark E$timate® retirement planning worksheet, over 100 online calculators, brochures, savings tips, links to related resources, and other tools to help individuals and their family manage their finances. Visitors can also view and listen to the PSAs from the Web site.


• A variety of free savings tools and brochures focused on topics such as Saving for Your Family’s Future, Just Starting Out, The Magic of Compounding, Maximizing Your Company Savings Plan, Why Open an IRA, It’s Never Too Late to Save, and much more.